Phony Charities Target Veterans

A Florida NBC affiliate investigated local and national charities target veterans, finding that of the approximately 1,900 veteran charities, many are merely targeting veterans for scams. It’s not how much money the organization raises millions of dollars, the crucial measure is how much it spends on the needy. Charity experts point out that at least 70 percent of a charity’s expenses should go to programs or services, while no more than 30 percent for management and fundraising.

Some organizations have fudged their numbers with “in-kind” donations to veterans – things, rather than money. According to the IRS Exempt Organization Report (EO), it continued examinations of charities that participate in “Gifts-in-Kind” programs” in which charities send non-cash items to other domestic or foreign organizations. EO revoked the § 501(c)(3) exempt status of two organizations due to excessive private benefit and insufficient charitable activity. In other cases, EO noted the following problem areas:

• Poor recordkeeping of the gifts-in-kind

• Inaccurate reporting of this activity on Forms 990

• Inadequate discretion and control over the final disposition of the items

More cases are being reviewed for potential examinations, with specific emphasis on organizations with limited charitable activity and excessive compensation.